Many California residents want to set up a trust for estate planning purposes. However, others who would like to set up a trust do not do it because they are worried that the expense of doing so is more than they can afford. Here are some facts about setting up a trust.
Costs assiciated with trusts
The cost of setting up trusts ranges from $1,500 to $2,500. The amount required to establish a trust depends on various factors, such as the complexity of the trust, the jurisdiction where it gets established, and potential fees for transferring assets into the trust. Additionally, legal professionals may charge an hourly rate to assist clients in the trust setup process. Other expenses may include filing or updating information for assets getting transferred, such as titles, registrations, licenses or deeds. Management costs may involve hiring an accountant to handle tax matters, including the annual tax return.
Defining a trust
A trust is a legal arrangement that enables an individual, a group of people or a business to oversee and manage the assets and finances of another person, acting on behalf of and for the benefit of designated beneficiaries. Testamentary trusts come into effect after the individual who established the trust passes away. In contrast, living trusts allow beneficiaries to receive benefits when the trust is created. A revocable trust can be altered or revoked according to the conditions set by the trust creator, while an irrevocable trust is permanent.
Trusts are among the various estate planning tools available to help individuals protect their assets and ensure the financial well-being of their loved ones after their death. While creating a trust incurs some costs, many find the expense worthwhile due to the peace of mind it provides in knowing that their loved ones get taken care of.